Agreed, but.... I had incorrectly assessed the state of the industry as it applied to short stock, as did everyone except the "stonk marketeers", when the Meme stock short squeeze happened. It was honestly among the freaking coolest market events I've watched unfold.
Not to go too off topic, but that event put a microscope on the industry and revealed just how flawed the margin rules of hypothecation, rehypothecation and the back end accounting by the DTCC and ex-broker clearing systems allowed to be created extreme levels of short stock to remain in the system and the fact in practice over 100% of the float be shorted. I'm doubtful reforms will be made to correct the system at this back office level as there is too much money to be made, but there are some proposals currently being reviewed that create more disclosure and reporting. IMO most current proposed changes to short disclosures are weak.
Bottom line is that this flawed system remains in effect and COULD make for upside fireworks should any positive binary event for $AVXL occur and of course would be nice, but short market participants learned from the past and hedging strategies have been implemented and adjusted so I think a squeeze effect will be tempered. Regardless of the details and of hedging, on the most basic level the shares shorted represent pent up buy pressure should the stock move against the shorts position.
My skills and knowledge are aging in this era of electronic trading but some things should remain true.
Side note, I appreciate all of your posts. Peace out!
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